Correlation Between Sun Country and Perceptive Capital

Can any of the company-specific risk be diversified away by investing in both Sun Country and Perceptive Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sun Country and Perceptive Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Country Airlines and Perceptive Capital Solutions, you can compare the effects of market volatilities on Sun Country and Perceptive Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sun Country with a short position of Perceptive Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Perceptive Capital.

Diversification Opportunities for Sun Country and Perceptive Capital

0.67

Correlation Coefficient

Sun Country  Perceptive Capital

Poor diversification

The 3 months correlation between Sun and Perceptive is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Perceptive Capital Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perceptive Capital and Sun Country is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sun Country Airlines are associated (or correlated) with Perceptive Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perceptive Capital has no effect on the direction of Sun Country i.e., Sun Country and Perceptive Capital go up and down completely randomly.

Pair Corralation between Sun Country and Perceptive Capital

Given the investment horizon of 90 days Sun Country is expected to generate 48.73 times less return on investment than Perceptive Capital. But when comparing it to its historical volatility, Sun Country Airlines is 25.35 times less risky than Perceptive Capital. It trades about 0.04 of its potential returns per unit of risk. Perceptive Capital Solutions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Perceptive Capital Solutions on October 9, 2024 and sell it today you would earn a total of  1,018  from holding Perceptive Capital Solutions or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	58.7%
Values	Daily Returns

Sun Country Airlines  vs.  Perceptive Capital Solutions

Sun Country Airlines

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Sun Country showed solid returns over the last few months and may actually be approaching a breakup point.

Perceptive Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perceptive Capital Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Perceptive Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sun Country and Perceptive Capital

The main advantage of trading using opposite Sun Country and Perceptive Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Perceptive Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Perceptive Capital will offset losses from the drop in Perceptive Capital's long position.

The idea behind Sun Country Airlines and Perceptive Capital Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.